Appointed as the next Reserve Bank of India (RBI) governor, Raghuram Rajan on Tuesday assured that challenges facing the Indian economy will be dealt with, and that the economy will return to a positive growth track soon.

There is no "magic wand" to fix India's economic problems but there is “no doubt that we'll fix them”, Rajan, appointed for a term of three years, said while addressing the media.

“It’s a great honour to be appointed the next RBI governor. I am looking forward to working here,” Rajan said.

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At present the chief economic advisor to the government, Rajan will assume his new charge on September 5, a day after the present apex bank governor, D Subbarao, retires.

Giving thumbs up to the appointment, Vipul Jhaveri, partner with consultancy services firm Deloitte, said: "I had expected his appointment since he was the strongest contender for the post. Unlike the present governor, who had different views on certain economic policies, Rajan's views are more in line with the government's. This, I hope, will prove beneficial to the economy and will streamline the decision-making process."

According to a statement issued by the finance ministry, “(The) prime minister has approved the appointment of Dr Raghuram Rajan as the governor of Reserve Bank of India for a term of three years. Dr D Subbarao will be completing his tenure on September 4.”

Speculations regarding the next RBI governor had set the grapevines abuzz after Subbarao expressed his desire to “move on” instead of agreeing to an extended term, which the government was hoping for. Apart from Rajan, the other names emerging for the top post at the central bank were those of Arvind Mayaram, the secretary in department of economic affairs, planning commission member Saumitra Chaudhuri and RBI deputy governor Urjit Patel.

Rajan and Mayaram were seen as the strongest contenders considering their proximity to the finance ministry and have been making attempts to provide the requisite fillip to the economy.

Rajan, a former IMF chief economist, is known for his in-depth knowledge in the field of finance and economics and his supporters see him as someone who could bring in bold and innovative reforms, an important requirement when the economy is sailing through troubled waters.

He was appointed the chief economic advisor to the government a few days after P Chidambaram became the finance minister last year.

In his new role, the first and foremost challenge Rajan will have to overcome is to stabilise the rupee, which recently hit an all-time low of below 61 to a dollar, besides solving the problem of non-performing assets (NPA) in banks and boosting their lending activities.